Khandelwal Oil Industries vs Commissioner of Income Tax

Sohani, J.—This is an application u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

The material facts giving rise to this application, briefly, are as follows :

The petitioner is a firm registered under the Partnership Act and under the Income Tax Act for the relevant assessment year 1974-75, for which the accounting year ended on Diwali, 1973, In respect of the assessment year in question, the petitioner filed its return on June 30, 1974, disclosing a total income of Rs. 55,702. While proceedings for assessment were pending before the Income Tax Officer, on December 31, 1975, the petitioner made a disclosure of income of Rs. 31, 600, in respect of the assessment years 1972-73 to 1975-76 under the Voluntary Disclosure of Income and Wealth Ordinance, 1975. The Income Tax Officer by his order of assessment dated September 23, 1977, made an addition of Rs. 33,566 to the disclosed income of the petitioner. On appeal, it was contended by the assessee that the petitioner should have been given credit for the disclosed income of Rs. 31,600 against the addition of Rs. 33,566 made by the Income Tax Officer. The Commissioner of Income Tax (Appeals) by his order dated December 19,1978, allowed the appeal and remanded the matter to the Income Tax Officer with a direction to examine whether the appellant was entitled to immunity under the Voluntary Disclosure of Income and Wealth Ordinance, 1975. After the remand, the Income Tax Officer held that since the disclosure of income was in respect of the four assessment years 1972-73 to 1975-76, the petitioner was entitled to immunity in the assessment year 1974-75 only, to the extent of one-fourth of the amount of Rs. 31,600. Aggrieved by that order, the petitioner filed an appeal before the Appellate Assistant Commissioner which was rejected. The second appeal preferred by the assessee before the Tribunal was also dismissed As the application u/s 256(1) of the Act filed by the assessee for making a reference to this court was rejected, the assessee has filed this application.

Having heard, learned counsel for the parties, we have come to the conclusion that the following questions of law do arise out of the order passed by the Tribunal;

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee could not claim to set off of the entire disclosed income pertaining to the assessment years 1972-73 to 1975-76 against the addition to the income for the assessment year 1974-75 ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in dividing the disclosed income of Rs. 31,600 into four equal parts and considering each part as the income disclosed in respect of a particular assessment year ?"

We accordingly direct the Tribunal to state the case and to refer the aforesaid questions of law to this court for its opinion. In the circumstances of the case, parties shall bear their own costs of this application.